ICOS president tells members ‘price will make your quota in future’

MILK quotas are gone, and there’s nothing to be gained from living in the past, according to Irish Co-operative Organisation Society (ICOS) president Pat McLoughlin.

“There is another way you can make your quota. Price will make your quota in future,” said Pat McLoughlin, speaking to members at the recent ICOS annual conference in Citywest Hotel, Dublin.

“Quotas are gone and there is no point in dreaming on about it. The Government’s goal of increasing dairy production by 50% by 2020 will only be achieved if there is a profit in it for the producer.

“I would urge our members to please try to keep in touch with the various reports on CAP reform that are coming out. The boards of each co-op must discuss these issues. This is a crucial period in our industry, and the onus is on us to do what is right by our members.”

ICOS dairy policy executive TJ Flanagan agreed that the era of milk quotas is gone. He said that some people’s belief that quotas might still have a future was due to an industry-wide view that the EU may allow France and Germany to retain some form of national quota.

He said Irish dairy co-ops should focus on getting more active dairy farmers into share ownership, to re-energise those co-ops which have been weighed down by non-dairy farmers holding onto old shares despite no longer having any role in the dairy sector.

All parties agreed that clarity on price post-CAP 2013 was needed to spark change.

Oliver Manley of Cork Marts agreed with the views expressed by Irish Dairy Board chief Kevin Lane and by Pat McLoughlin that any future growth in Irish milk production would be entirely dependent on price per litre, and on farmers believing that there was a profit to be made to justify the scale of capital investment on extra cattle, sheds and equipment needed to drive increased production and processing.

Oliver Manley said: “I agree with Kevin Lane that growth will be based on price alone. We need to have a proper assessment and projection of price. Will the future be 20c, 22c or 32c per litre? If it is at the lower end of the scale, you won’t get the type of growth the Government is looking for.”

Kevin Lane said that the three-year milk price forecast by RaboBank of 25c to 26c per litre was a reasonable yardstick to help dairy farmers gauge their likely future incomes.

IFA national dairy chairman Kevin Kiersey cited one farmer who had estimated he would need to invest €3,500 per cow, a cost which incorporates the overall livestock, storage and other equipment costs.

Kevin Lane estimated that the total cost of preparing the dairy sector for a 50% production increase could come to €850m or €900m.

This would cover €400m in capital investment, around €250m to €300m in finance for storage and working capital, and €200m on opening routes to overseas markets.